Foreign direct investment (FDI) inflows to South Asia declined by 24 per cent to USD34 billion in 2012, UNCTAD’s World Investment Report 2013 reveals. FDI inflows to India dropped by 29 per cent to USD26 billion; inflows to Pakistan fell by 36 per cent to USD847 million; inflows to Bangladesh also decreased by 13 per cent, to about USD1 billion; while inflows to Sri Lanka declined by 21 per cent to USD776 million.

Launched in New Delhi by Dr. Nagesh Kumar, Chief Economist, ESCAP and Director, ESCAP South and South-West Asia Office, the Report shows that the decline was a part of the global trend of decline in FDI inflows globally with continued global economic uncertainties. The Report expects the rate of growth of global FDI flows in 2013 to remain flat and to grow modestly in 2014-15.

An important positive development this year is that for the first time, developing countries received more than half of investments. “Finally, investments are going to places that need them most. Developing countries are now emerging as major hosts and also as significant sources of FDI, a dramatic change from what used to be, essentially, a developed countries to developed countries phenomenon”, said Dr. Nagesh Kumar.

The Report finds that the investment prospects of South Asia are improving and that the subregion could receive increasing FDI in the coming years. A survey conducted by UNCTAD shows that India remains the third most attractive destination for FDI, after China and the United States of America, for 2013-15, according to a survey of global companies. India’s ranking among the most attractive destinations for FDI is shared by other surveys such as those conducted by AT Kearney, Ernst and Young and the Japan Bank of International Commerce (JBIC), said Dr. Kumar. He has projected FDI inflows to India to grow by about 15per cent in 2013-14.

Subtitled “Global Value Chains: Investment and Trade for Development”, this year’s World Investment Report proposes smart government strategies to make value chains work for development. Given the increasing dominance of global value chains in world trade, the Report highlights the opportunity given to developing countries to increase their “value capture” – the harvest greater profits, wages, and retained investment -- as goods make ever-more-complex international journeys from raw materials to finished products.

The launch in New Delhi of UNCTAD’s flagship Report was organized by ESCAP-SSWA in collaboration with United Nations Information Centre for India and Bhutan.